Flashfunders Joins Equity Crowdfunding Fray
With equity crowdfunding less than 60 days old, measuring from the date the SEC’s Regulation CF became effective in May, the marketplace is beginning to take shape. Flashfunders is one of the players offering a crowdfunding portal.
Vincent Bradley, the CEO of Flashfunders, shared his take on the emerging crowdfunding market.
Vincent sees two related problems in the market. “Historically, there have been large hurdles in both the fundraising and investing spaces, namely a lack of accessibility. Startups and small businesses have had limited options for financing, many of which were expensive and time consuming to pursue. Additionally, those startups have often been unable to offer equity to investors who are truly passionate about their business model.”
The JOBS Act, which directed the SEC to implement crowdfunding, was passed four years before the SEC rules became effective.
With respect to the second problem, Vincent notes, “Before Title III went into effect giving power to average investors, there were very few investment options available. Private investing was a right reserved only for the 1 percent, the accredited investors.”
Crowdfunding fundamentally addresses both problems. Vincent explains the company’s international approach, saying, “FlashFunders’ equity crowdfunding platform is giving startups and small businesses a progressive financing option. It empowers companies to raise capital from all types of investors – the crowd, international, and accredited- in a single fundraising round. The platform also provides everyday investors with the tools they need identify and invest in innovative businesses that they believe in.”
One of the challenges of crowdfunding comes directly from the delay in implementation. A burst of enthusiasm about the JOBS Act in 2012 and 2013 gave way to skepticism about some of the law’s specifics and investors willingness to participate in a market they’ve been blocked from for eight decades.
Vincent acknowledges some of the challenges that portals face in this market. “With uncharted territory comes a lack of public knowledge about the process, and general skepticism of whether it is a valid option or not. Our greatest challenge will be educating potential investors and companies of the financing model, as well as its risks and benefits.”
The SEC’s regulations, consistent with the JOBS Act, provide strict limitations. He says, “While companies using FlashFunders can raise an unlimited amount from international and accredited investors, under the Reg CF regulations they can only raise up to $1 million from the crowd in a single round. Additionally, crowd investors, whose yearly investment limits are calculated by their income, are self-certified. We provide an investment calculator for these investors to determine how much they can legally invest, but beyond that, platforms cannot control if unaccredited users are investing beyond their means. While the regulations can be confusing, we understand that they have been put in place for the protection of both investors and businesses using Reg CF.”
Despite the challenges and limitations, Vincent remains optimistic. “We think that equity crowdfunding has the potential to cause a major ripple effect across the country. Over time we may see a slow redistribution of wealth since everyday citizens have now been afforded the same investment options as accredited investors,” he says.
“Additionally, equity crowdfunding makes capital borderless. Businesses and investors are now able to access and invest capital no matter where they are located. For businesses this is especially powerful, since they are no longer forced to move to expensive cities to secure financing, and can instead build their companies in affordable environments,” Vincent concludes.
On Thursday, July 7, 2016 at 3:00 Eastern, Vincent will join me here for a live discussion about equity crowdfunding. We will also be joined by his colleague Meaghan Carlson, the Director of Marketing & Brand Strategy. Tune in here then to watch the interview live. Post questions in the comments below or tweet questions before the interview to @devindthorpe.
More about Flashfunders:
FlashFunders, the equity crowdfunding platform, connects global investors with innovative startups and small businesses raising capital, enabling everyone to own a piece of a company they believe in for as little as $50. FlashFunders empowers companies to convert their customers into shareholders and leverage investments from the crowd, international and accredited investors in a single fundraising round. With its streamlined deal execution and compliance, FlashFunders supports companies from the Form C prep through post-fundraising with FlashFunders Shareholder Services, and aims to help entrepreneurs activate a passionate community of shareholders to advocate for their businesses. Launched in 2014, FlashFunders is headquartered in Santa Monica, California.
Vincent Bradley, courtesy of Flashfuders
Vincent Bradley is a serial entrepreneur with a diverse background in product and business development. Before co-founding FlashFunders, Bradley consulted for several technology startups, providing them with growth and product guidance. Prior to consulting, Vincent co-founded Ridotto, a virtual currency sports betting startup. Bradley also spent time working with Osprey Global Solutions (OGS), a frontier market consulting firm. While at Osprey, he focused on business development for OGS throughout the Middle East, Europe and North Africa. Prior to Osprey, Bradley was an early employee at FindTheBest, where he helped to build out its business development team.
Meaghan Carlson, courtesy of Flashfunders
Meaghan Carlson is Director of Marketing & Brand Strategy at Santa Monica-based equity crowdfunding platform FlashFunders. Before joining FlashFunders, Carlson led major marketing campaigns for Disney and PayPal during her tenure at Mistress, an award-winning brand agency. Her in-depth strategic, digital marketing and communications background has driven the repositioning of European spirits brands and brand leadership of Viacom, Banana Republic and Sony. While at FlashFunders, Meaghan has proved her merit outside of her executive duties by contributing to the overall startup ecosystem as a published thought leader in top-tier publications. Her insights on widely discussed topics in venture capital, millennial finance insights and small business have been published in both TechCrunch and CBS Small Business Pulse.
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